OpSec firm buys Delta labelling in £12.5m deal

AN anti-counterfeit business is expanding its work preventing shops from selling fake branded clothing with its latest acquisition.

AN anti-counterfeit business is expanding its work preventing shops from selling fake branded clothing with its latest acquisition.

The Washington business, which mainly works with around 40 governments and 100 firms making passports, concert tickets and national ID cards, is now paying £12.5m for Midlands firm Delta which makes clothing labels designed to ensure shoppers know they are buying the real brand.

OpSec chairman David Mahony said: “We are pleased to announce the proposed acquisition of Delta, which will complement OpSec’s existing brand protection business in the fashion and apparel sector, and which we expect to be earnings enhancing within the first year of its acquisition.”

Delta, which has bases in Tamworth, Staffordshire, and in Hong Kong, supplies leather, printed, woven, PVC and metal labels to the fashion industry.

Its main customers include an international sportswear manufacturer and a high street fashion chain and the company made a operating profit of around £2.2m for the year to the end of December.

OpSec, which has around 85 staff at its Washington head office and 280 globally, said: “Delta has a consistent record of profitability and cash generation and OpSec’s directors believe that Delta will complement OpSec’s existing brand protection business in the fashion and apparel sector.

“The proposed acquisition of Delta will also provide OpSec with a distribution facility in Hong Kong and an opportunity to increase its presence in Asian markets.”

The acquisition will also provide “significant cross-selling opportunities”, plus new products to sell and the opportunity to sell its other products to Delta customers, OpSec said.

OpSec aims to make the first cash payment for the firm with two share placings – raising £7.8m from existing shareholders and £2m from vendor subscription share placing for Delta’s current shareholders.

Following their issue, the shares will form around 17.3% of the enlarged share capital, while the vendor subscription will amount to around 2.7%. The company hopes it will boost its bottomline after issuing a profit warning in February after what it called an “extremely difficult” second half – traditionally its stronger half.

OpSec, which also has offices US, Europe, Hong Kong and the Dominican Republic, said earnings for its full year, ending March 31, would be “substantially lower than last year”.

But it had returned to profit in its previous financial year, posting a £1.2m pre-tax profit in 2011 after making a £262,000 loss in 2010.

And its revenues increased by 15% to £40.4m in the 2010/11 year, while its operating profits more than doubled to £3.4m from £1.6m. But OpSec made a £1.72m pre-tax loss in the first half of its year after being hit with a £1.96m exceptionals charge.